CORRECTED-MOVES-Goldman Sachs names co-presidents to succeed Cohn

Reuters Staff

4 Min Read

(Corrects title of Pablo Salame in para 10)

By Philip Scipio

NEW YORK, Dec 14 (IFR) - Goldman Sachs on Wednesday named David Solomon and Harvey Schwartz presidents and co-chief operating officers to replace Gary Cohn, who is leaving to head the National Economic Council.

Cohn had been widely expected to succeed CEO Lloyd Blankfein, and his departure - after 26 years - shook up the succession planning at the bank. He had been COO for a decade.

Donald Trump tapped Cohn to lead the NEC, clearing the way for Blankfein to balance his leadership ranks with executives from both Goldman's investment banking and trading wings.

"Solomon as a client guy in investment bank and Schwartz as a client guy in capital markets," said Mike Mayo, an analyst at brokerage CLSA.

"Both traders and bankers are represented at the top of the house," he said, noting that the departure of Cohn, who sees 500 GS clients per year, was a significant loss for the bank.

Solomon, 54, has been the co-head of the investment banking division for a decade.

He is a member of Goldman's management committee and co-chairs the investment-banking division's executive committee.

He had been global head of the financing group, which includes all capital markets and derivative products for the firm's corporate clients.

He joined Goldman Sachs as a partner in 1999.

The bank named another co-head of the investment-banking division, Richard Gnodde, and Pablo Salame, co-head of securities, as vice chairmen of the firm, effective January 1.

The bank has no plans to name a third investment bank head in the near term, according to sources.

Schwartz, 52, is currently Goldman's chief financial officer and will remain in that post until the end of April.

The bank named Martin Chavez deputy CFO, allowing him to learn the ropes as the bank completes its 2016 annual financial disclosure and its first-quarter earnings report in mid-April.

Chavez will assume full responsibilities as CFO in May.

"These five leaders have distinguished themselves in their respective areas of expertise," Blankfein said in a statement.

Schwartz has been CFO since 2013 and had been global co-head of the securities division since 2008.

He was head of North America sales from 2005 to 2007, and from 2004 to late 2005 he was co-head of the Americas financing group within investment banking.

Schwartz sits on the bank's management and risk committees.

The installation of co-presidents could lead to a natural competition to succeed Blankfein, as the post has been a launching pad for the top job in the past.

Blankfein served as president, as did his predecessor Henry Paulson, who left Goldman to serve as US Secretary of the Treasury.

Whichever side of the bank is seen to be performing better when the time comes could tip the scales in favor of one candidate or the other.

"The winner will definitely be the guy who generates the most income," said Rafferty Capital analyst Dick Bove. "To me that gives the edge to Solomon."

For the past decade investment banking has outperformed trading, which would favor Solomon. The next decade could see a rebound in trading, however, favoring Schwartz.

CLSA's Mayo said: "Goldman has such a cohesive culture that if there is a contentious relationship they both lose." (Reporting by Philip Scipio; Editing by Marc Carnegie)